It’s official. As alluded to last month, the Morrison Government has launched another housing affordability inquiry – this time examining ‘supply-side impediments’.
Below is the marketing spiel from Coalition committee chair Jason Falinski:
“As data provided by the Reserve Bank of Australia (RBA), the Treasury and the Australian Bureau of Statistics (ABS) shows, home ownership, one of the building blocks of Australian society, has been falling for the last 30 years. In my view, this represents an urgent moral call for action by governments of all levels to restore the Australian dream for this generation and the ones that follow.”
“Arguments about the impact of increased subsidies and tax concessions on housing have continued for some time. There is ample evidence that points to the small effect such measures have on supply, indeed the research points to limitations on land and restrictive planning laws as the major causes of shortages in supply. As consistently noted by the RBA and others, regulatory settings are directly responsible for the unresponsive nature of housing supply in Australia.”
“The Organisation for Economic Co-operation and Development (OECD) conducted an analysis of Australia’s housing market, particular its very high ratio of housing prices to household incomes. The OECD concluded that Australia’s unusually high level of inelasticity in housing is the major driver of this ratio. This has resulted in our country having the fourth-fastest house price growth out of the world’s advanced economies over the past 20 years.”
“This is best demonstrated by the following fact: total residential private building approvals decreasing 44% across the nation from 2016 – 2020 compared to the previous five-year period according to the ABS. While market supply has collapsed with new home listings down to record lows according to Core Logic using the most recent five-year average.”
“It is with this context that the House of Representatives Standing Committee on Tax and Revenue will investigate the impact of tax and regulatory regimes on price, affordability, and supply of housing in Australia today as well as into the future.”
Realestate.com.au labelled the inquiry a win for homebuyers:
Homebuyers are set to be the winners of the biggest shake-up of property taxes and red tape impacting affordability, with a federal inquiry launched to zero in on all arms of government doing the worst damage.
Let’s cut through the bull. Australia’s governments have run numerous housing affordability inquiries over decades, including but not limited to:
- Menzies Research Centre: Prime Ministerial Taskforce on Home Ownership 2003;
- The Productivity Commission’s First Home Ownership Report in 2004;
- A Good House is Hard to Find Report from the Senate Select Committee on Housing Affordability in Australia in 2008;
- Western Australia’s Affordable Housing Strategy 2010-2020;
- NHSC: State of Supply Reports (2008, 2010, 2011, 2012, 2013 onwards);
- Senate Inquiry into Affordable Housing, 2014-2015; and
- Parliamentary Inquiry into Home Ownership 2015.
On top of these we have gotten many reports from think tanks like the Grattan Institute, the McKell Institute, and others.
Thousands or work-hours and millions of dollars worth of salaries and consultants’ fees have been spent on these reports and absolutely nothing has come from them. So what is the point of wasting more taxpayer dollars? Nothing will come from this inquiry because our politicians don’t actually want more affordable housing, since this requires prices to fall.
Besides, if the Morrison Government truly believed there was an “urgent moral call for action by governments of all levels to restore the Australian dream for this generation and the ones that follow”, then it would have supported Labor’s negative gearing and capital gains tax reforms last election.
The sole focus on the supply-side – red tape and taxes – suggests this inquiry is being driven by the Coalition’s property developer mates.
Any housing shortage pre-COVID was unambiguously caused by the federal government throwing open the immigration floodgates in 2005:
Australia’s immigration intake accelerated after 2005.
Australia’s net overseas migration (NOM) jumped from an average of 89,000 between 1991 and 2004 to an average of 215,000 between 2005 and 2020 – an annual average increase in immigration of 140%.
But now that immigration has collapsed, Australia’s ‘housing shortage’ has miraculously disappeared:
Big dwelling oversupply in the pipeline.
Thus, the first best solution to Australia’s housing supply problem is not to return immigration back to its pre-COVID turbo-charged level.
Regardless, Australia’s developers are sitting on a mountain of zoned residential land, totaling a decade-plus of supply:
Developers are sitting on masses of zoned land.
Therefore, it is hard to take the government’s supply claims seriously in light of the above evidence.
Sadly, our political leaders don’t care about these truths. After stimulating the construction of thousands of extra homes through HomeBuilder, the federal government has already stated that it will return to importing hundreds of thousands of migrants to fill them as soon as the pandemic subsides. This is how Australia’s Ponzi economy works, after all.
Australia is the housing equivalent of a narco state. And our governments dance to the tune of their property lobby paymasters.
